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NRI investment in private limited company is fast becoming a trend, with more and more people opting to invest their money in such a manner. A common doubt we hear is whether investment by NRI in an Indian company is possible. Further, with the simplification of the procedure, we also receive several queries regarding Indian company registration for NRIs. So, in order to make things clearer, and to ensure that you are familiar with the latest rules and regulations, we have gathered all the essential information you will need regarding NRI investment in private limited company.
Private Limited Companies are those that are managed and run by a group of private individuals or an individual. These companies do not announce or offer shares in the market or trade in the stock exchange, as is done by Public Limited Companies. Another feature that distinguishes a private limited company from a public limited company is the number of shareholders. Essentially, a minimum of two investors are required for a private limited company, and a maximum of fifty investors are allowed.
Before going into the details of how an NRI can invest in a private limited company in India, you should first be clear about your residential status for the year. You will be considered an NRI for a financial year if you meet the following criteria:
If you meet either of the above criteria, you are considered an NRI for that financial year. Once you know your current residential status, you can be sure whether to invest in India as an NRI or whether you will be considered a resident for the current financial year.
The short answer to this is a resounding yes. Non Resident Indians are welcome to invest in a private limited company if they wish to do so. NRIs are permitted to subscribe to the Memorandum and Article of Association and take up company shares for the incorporation of a business. Thus, NRIs can make direct investments in a private limited company, without seeking a complicated approval procedure from the Reserve Bank of India. Further, in order to encourage investments by NRIs, the procedure for registration of a private company in India are also not overly complicated.
Before you take the decision to invest in a private limited company in India, there are certain considerations and caveats you should keep in mind. We have made a list of all the essential information you must know as an NRI before investing in a private limited company in India. Here is the list.
The procedure for registering a private limited company in India is as follows:
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